UK-Singapore Digital Economy Agreement: Final Agreement Explainer
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Tue, 14 Jun. 2022
The UK-Singapore Digital Economy Agreement (DEA) is the world’s most innovative trade agreement, covering the digitised trade in services and goods across the whole economy. As 2 of the most advanced digital trading nations, the UK and Singapore have reached a ground-breaking international deal that is deeper and wider than previous trade agreements covering the modern digital economy.
The DEA core trade agreement covers the following areas:
- Open and inclusive digital markets
- duty-free digital content
- co-operation on competition policy
- support for small businesses
- standards and conformity assessment
- a more inclusive digital economy
- Data flows
- cross-border data flows
- international data centres
- personal data protection
- open government information
- data innovation
- Consumer and business safeguards
- online consumer protection
- consumer protection against spam
- online safety
- cyber security
- protection for cryptographic information
- protection for source code
- Digital trading systems
- modern electronic contracts
- digital authentication
- digital invoicing
- paperless trading
- digital customs
- modern logistics
- Financial services
- financial information
- new financial services
- electronic payments
- Tech partnerships
- artificial intelligence and responsible use of emerging technologies
- lawtech collaboration
- collaboration on digital identities
- stakeholder engagement and collaboration
- Additional provisions
- information sharing
- security, prudential carve-out and general exceptions
- submarine cable landing systems
Alongside the conclusion of the core DEA agreement, 5 associated co-operation arrangements have been concluded between the UK and Singapore:
- UK-Singapore Fintech Bridge
- DEA Digital Customs
- DEA Cybersecurity
- DEA Digital Identities
- DEA Electronic Trade Documents and Electronic Invoicing
Digital trade is rapidly becoming the dominant form of trade. Seizing the opportunities in this area is fundamental to our prosperity. In 2019, the UK exported £207 billion worth of digitally-delivered services, almost two-thirds of our total services exports. Cross-border e-commerce sales of goods and services in the same year were worth £118.2 billion.
The DEA capitalises on the UK’s strengths as the world’s second largest services exporter and fifth largest digital services exporter. Modern, digitally-delivered services represented around 70% of UK-Singapore services trade in 2019, and the DEA links 2 of the world’s most dynamic hi-tech and services hubs.
The agreement also provides a wide range of benefits for businesses who trade in goods. It will cut costs, slash red tape and pave the way for a new era of modern goods trade between the UK, Singapore and the wider region. Cumbersome border processes will be streamlined, while time-consuming and costly paperwork will be replaced more and more with e-signatures and e-contracts.
The agreement enables trusted cross-border data flows, the foundation for today’s modern global economy, enabling businesses to trade easier, cheaper and more quickly. It will facilitate everything from more efficient manufacturing and supply chains to more reliable infrastructure.
The DEA is designed to guarantee online consumer rights, promote online safety, help protect businesses and society from cyber-attacks, and prevent the abuse of intellectual property. Importantly, the DEA also guarantees personal data protection.
The DEA also creates new tech partnerships between the UK and Singapore, including co-operation on artificial intelligence, fintech, lawtech and data innovation.
1. Open and inclusive digital markets
Duty-free digital content
The free-flow of content across borders – whether in the form of an e-book or a music streaming service – is fundamental to open digital markets. The agreement guarantees the free flow of digital content between the UK and Singapore by ensuring that the content is not subject to customs duties. This guarantees lower costs for businesses and consumers of digital content.
Co-operation on competition policy
The UK and Singapore will co-operate on competition policy, recognising the benefits this can bring in tackling the challenges that arise from the digital economy.
This co-operation could include exchanging information and experience on the development of competition policies for digital markets. It could also involve sharing best practices on the enforcement of competition law, and the exchange of officials.
Support for small businesses
The UK and Singapore will tackle barriers to the participation of small and medium-sized enterprises (SMEs) in the digital economy, helping companies – no matter how small they are – take advantage of the vast opportunities offered by digital trade and the digital economy.
This will include activities such as:
- promoting co-operation between SMEs on digital trade and SME jobs and growth
- encouraging SME participation in platforms linking them with commercial contacts
- exchanging information and best practice across a range of areas to help SMEs adapt to digital trade
Standards and conformity assessment
The UK and Singapore will participate and co-operate in international fora on areas of mutual interest to promote the development of standards relating to digital trade. Where relevant this would be through encouraging their respective standardisation bodies to co-operate.
Future co-operation relating to standards and conformity assessment could include exchanging best practice and identifying joint initiatives in the field of standards. It could also involve co-operation between governmental and non-governmental bodies, including research or test-bedding projects.
A more inclusive digital economy
According to the UN, almost half of the world’s population, 3.7 billion people, mostly from developing countries, are still not connected to the internet, and thereby unable to participate meaningfully in much of digital trade.
The agreement marks the start of a programme of co-operation between the UK and Singapore on digital inclusion. This includes the participation of women and other groups and individuals who face disproportionate barriers to digital trade. Lessons from this approach will be used more widely to encourage greater digital inclusion around the world.
Areas for co-operation include but are not limited to:
- addressing barriers in accessing digital trade opportunities
- sharing work on datasets and analysis relevant to inclusion
- improving digital skills and access to online business tools
- promoting labour protection for workers who are engaged in or support digital trade
The UK and Singapore will collaborate on capacity building and promoting participation in the global development of digital trade rules. The UK and Singapore will together participate actively at the WTO and in other fora to promote digital inclusion.
2. Data flows
The digital economy is increasingly central to the global economy, representing as much as $11 trillion or 15.5% of global gross domestic product (GDP) in 2019. And even this figure is likely to underestimate the value of digital trade, which generates benefits across the whole economy. Data is at the very heart of this.
Whether it is cross-border monitoring of jet engines or use of data to integrate production processes spread across different countries, data flows underpin modern trade. Securing these data flows helps UK businesses stay at the forefront of the modern economy.
Cross-border data flows
The deal enables the free flow of trusted data between the UK and Singapore for business purposes by preventing unjustified restrictions to cross-border data transfer. This means trade can flourish between our 2 countries.
This does not prevent the UK or Singapore from placing restrictions on cross-border data transfers if these are introduced to achieve a legitimate public policy objective. For example, the protection of personal data. This exemption requires that any restrictions are no more restrictive than required to achieve the stated public policy objective. Such restrictions also cannot be applied in way which would represent an arbitrary or unjustifiable discrimination or a disguised restriction on trade.
International data centres
A requirement to use or locate computing facilities – such as data centres – in a country as a condition of doing business is a form of data localisation. Such practices hinder digital trade and make it harder for businesses to enter international markets. This is particularly prohibitive to SMEs.
This deal guarantees that UK businesses will avoid the cost of setting up servers and storing data in Singapore as a result of unjustified data localisation requirements.
The commitment not to require data localisation subject to an exemption if restrictions are introduced to achieve a legitimate public policy objective. This exemption requires that any restrictions are no more restrictive than required to achieve the stated public policy objective. Such restrictions also cannot be applied in way which would represent an arbitrary or unjustifiable discrimination or a disguised restriction on trade.
Personal data protection
The deal safeguards the UK’s high standards on personal data protection and locks in a requirement for personal data to be protected in both countries. The deal ensures that both the UK and Singapore maintain domestic data protection regimes and draw on world-leading international principles and guidelines in their design.
Transfers of personal data to Singapore must satisfy the UK’s data protection laws, providing confidence for consumers to shop online and benefit from international services. UK data protection rules will continue to apply. The deal requires both countries to publish information on these protections, including how citizens can take steps to enforce their personal data protection rights.
The agreement commits both countries to ensuring their data protection frameworks reflect important principles. These include:
- collection limitation
- data quality
- purpose specification
- use limitation
- security safeguards
- individual participation
The UK and Singapore will promote interoperability and compatibility between their different regulatory regimes, including through mechanisms such as mutual arrangements or broader international frameworks. The UK and Singapore will share information on how these mechanisms are applied and ways they could be extended to promote interoperability and compatibility.
Open government information
Both new and existing data-driven businesses thrive from having access to publicly available government information to offer innovative new services, such as Citymapper, to consumers.
The agreement will help to expand access to and use of publicly available government information, enhancing business and research opportunities, particularly for SMEs.
In making such information available, the UK and Singapore will (as far as possible) ensure the data is machine readable. It should be in an open format, contain descriptive metadata, be regularly updated and made available in spatially enabled format.
The agreement will promote data-driven innovation and support the cross-border electronic transfer of information. The UK and Singapore will do this by collaborating on data-sharing projects involving researchers, academics, and industry and with the possible use of regulatory sandboxes. The UK and Singapore will co-operate and share information on the development of policy and standards for data mobility, including data-portability.
3. Consumer and business safeguards
Online consumer protection
The agreement will help make consumers safer online by guaranteeing the UK and Singapore will have measures in place to protect consumers involved in digital trade. This will help protect consumers from misleading, deceptive, fraudulent and unfair practices.
The agreement supports co-operation between national consumer protection bodies on digital trade. Mechanisms to facilitate dispute resolution may also be explored.
Consumer protections against spam
The agreement allows recipients of unsolicited commercial messages, sometimes called spam or junk mail, to prevent their ongoing receipt. The agreement also requires that those receiving the messages have given their consent.
Unsolicited commercial electronic messages will need to be clearly identifiable and make clear on whose behalf they have been sent. Consumers will be able to take action against those sending unsolicited messages who do not comply with the rules.
Under the agreement, the UK and Singapore may also co-operate in cases of mutual concern on the regulation of unsolicited commercial messages.
The UK and Singapore will work together to promote a safer online environment, while maintaining an open, free and secure internet for all.
The agreement will help keep UK businesses and consumers safe through deeper co-operation on cybersecurity.
This could be done through initiatives such as:
- building capacity for responding to cyber security incidents
- collaboration mechanisms for acting against malicious code
- dialogue and information sharing on cyber security best practices
- mutual recognition of baseline security standards for consumer Internet of Things devices
- workforce development of cyber security skills
- collaborative research and development on cyber security across business, research and academia
Protection for cryptographic information
Businesses selling IT products will be able to enter the Singaporean market confident that they will not be required to transfer or provide access to proprietary cryptographic information.
Nor will they have to partner or co-operate with another person or use a particular cryptographic algorithm to sell commercial ICT products in Singapore.
There are some exceptions, including in the regulation of financial instruments and networks and devices purchased by the UK or Singaporean governments.
This agreement does not prevent the UK or Singapore requiring a manufacturer or supplier to preserve and make available cryptographical information where necessary. For example, for certain regulatory investigations or judicial proceedings, including relating to competition law.
Protection of source code
The agreement will protect businesses from facing forced transfer of their source code as a condition for entering the other country’s market. The threat of forced transfer of intellectual property such as this can deter UK businesses from entering into new markets. Reducing the risks in this way means UK business can expand overseas with greater confidence.
Software owners cannot be required to transfer or disclose source code as a precondition for use or the bringing to market of the software in the UK or Singapore. This includes algorithms expressed in that code.
Regulatory bodies, conformity assessment bodies or judicial authorities can also require the source code be made available for certain regulatory purposes. This is subject to safeguards against unauthorised disclosure, so that the exceptions are not abused. Following such an investigation, there is an exception to enable a legal remedy in respect of source code to be enforced.
Nothing in the agreement prevents voluntary transfers or access permissions for source code in a commercial context or under open-source licensing.
4. Digital trading systems
Modern electronic contracts
The agreement will open the way to reducing trading costs through the adoption of electronic transferable records, for example, bills of lading. Many countries currently only accept these in paper form. At present, one transaction involving moving goods across borders can require between 10 and 20 paper documents, totalling over 100 pages. Global container shipping is estimated to generate 28.5 billion paper documents a year. The potential savings are huge.
Under the agreement, the UK and Singapore are required to maintain frameworks for electronic transactions consistent with international guidelines. They will maintain legal frameworks for electronic records consistent with the UNCITRAL Model Law on Electronic Transferable Records.
More generally UK and Singaporean companies will be able to do business electronically, including through the use of electronic contracts, with greater confidence. Where electronic contracts are currently not possible due to domestic requirements, these exceptions will be made public and kept under review.
Doing business electronically – as opposed to having to do everything with physical paper – is quicker and cheaper, especially benefiting SMEs.
This agreement means businesses will be able to use electronic signatures without fearing that they will be rejected purely because they are electronic in form.
Companies doing business electronically will be free to agree appropriate authentication and signature methods for the transaction. However, certification of electronic authentication or the use of signatures from an accredited authority may be required for some categories of transactions.
The agreement promotes interoperable electronic authentication and the mutual recognition of electronic authentication and electronic signatures. It therefore opens the way to more seamless cross-border dealings.
The UK and Singapore will share information and collaborate to promote the adoption of interoperable electronic invoicing systems globally.
In implementing domestic electronic invoicing systems, the UK and Singapore will do so in a way that supports cross border interoperability. This will include through the consideration of international frameworks.
Making trade administration documents publicly available in electronic format, and accepting those forms electronically, directly reduces the cost of trade in goods.
The deal means electronic versions of trade administration documents will be recognised as legally equivalent to paper versions. There will be exceptions only where this would make the process less efficient or where there is a legal requirement for a paper version.
The UK and Singapore will co-operate to promote paperless trading and the acceptance of electronic trade documentation.
The agreement strengthens the UK and Singapore commitment to adopt or maintain single window systems. This will allow traders to submit all the documentation needed for a good to cross a border through a single contact point. This will drive down trading costs for the trade of physical goods between the UK and Singapore.
The UK and Singapore will share best practices and information on logistics. This could include in relation to last mile deliveries and electric, remote controlled and autonomous vehicles. Such information sharing could also cover cross-border options for the delivery of goods such as parcel lockers, and new delivery and business models for logistics.
5. Financial services
Data and digital technologies have transformed the financial sector. In 2019, 86% of financial services exports from the UK were digitally delivered. The agreement recognises the link between financial services and digital trade, including the place of innovative financial services at the forefront of the digital economy. It will help companies in this key sector expand their exports.
Unjustified requirements that restrict the cross-border transfer of data or mandate local data centres represent a barrier to the expansion of UK financial services firms.
The UK and Singapore have agreed improved commitments relating to the transfer of financial information by ensuring the prohibition of unjust data localisation. Appropriate safeguards remain to ensure appropriate access to financial data by financial regulators and the protection of personal data.
Further commitments remain to not prohibit or restrict the cross-border transfer of information between financial service suppliers, subject to appropriate safeguards on privacy and confidentiality.
New financial services
The UK and Singapore have enhanced commitments on new financial services by extending the article to include services new to the territories of both countries. This means UK businesses supplying new and innovative financial services in Singapore have stronger guarantees of non-discriminatory treatment.
The UK and Singapore have also agreed commitments strengthening our co-operation for innovative financial services. The UK and Singapore will seek to collaborate in areas such as fintech and regtech, financial integrity and stability, operational resilience, sustainability, and cross border development of new financial services.
The UK and Singapore recognise the importance of developing an efficient, safe and secure environment for cross-border electronic payments by encouraging the adoption of international standards, promoting interoperability between payment infrastructures and supporting innovation.
Further to this, the UK and Singapore shall endeavour to: promote greater transparency for regulation and standards for electronic payments, encourage providers to make new technology and standards publicly available, facilitate innovation and competition, and adopt relevant international standards to enable greater interoperability between electronic payment systems.
6. Tech partnerships
Artificial intelligence and responsible use of emerging technologies
The DEA sets out a pathway for UK and Singapore to share best practice and develop governance and policy frameworks for the responsible development and use of emerging technologies (for example, AI). These should reflect international principles and guidelines, risk-based approaches based on industry-led standards, and technological interoperability and neutrality.
Areas that the UK and Singapore will explore include:
- promotion of the interoperability of international AI governance frameworks
- wider issues of emerging technology such as unintended biases
- promoting collaboration on research, development and investment in AI development and its responsible use
The UK and Singapore will also actively participate in international fora, such as the Global Partnership on Artificial Intelligence.
The agreement will promote the development and use of trusted, safe and responsible lawtech.
The UK and Singapore will co-operate, such as through:
- establishing a dialogue on lawtech matters
- encouraging regulators, relevant bodies, and academics to share knowledge
- encouraging lawtech suppliers to explore new business opportunities in the other country
Collaboration on digital identities
The agreement will deliver greater compatibility and interoperability between digital identity systems in the UK and Singapore. This will support greater regional and global connectivity.
The UK and Singapore may achieve this through:
- work on technical interoperability of digital identity implementation
- developing comparable protection of digital identities
- supporting international frameworks
- exploring mutual recognition of digital identities frameworks
Stakeholder engagement and collaboration
The UK and Singapore will convene a Digital Economy Dialogue with the aim of promoting the benefits of the digital economy. The dialogue may include participation from researchers, academia and industry. Input from the dialogue may be used by the UK and Singapore to inform the implementation and further modernisation of the agreement.
7. Additional provisions
The UK and Singapore will publish information to raise awareness for businesses and consumers about how they can make the most of the opportunities that the DEA creates.
Security, prudential carve-out and general exceptions
This article ensures that the provisions of the DEA are covered by the general exceptions for both goods and services, the prudential carve-out (as relevant to the services provisions) and the security exception that are set out in the existing UK-Singapore Free Trade Agreement. This helps the UK and Singapore take appropriate steps to achieve legitimate aims such as to safeguard their national security.
Submarine cable landing systems
Authorised suppliers of public telecoms services will be ensured access to submarine cable landing stations and systems on a reasonable, non-discriminatory and transparent basis. Risk mitigation against damage to submarine cable landing stations and cable systems is permitted and may include measures to maintain the functionality of the system. The UK and Singapore may co-operate on mutual interests in this area.
DEA co-operation agreements
The DEA comprises 6 bilateral agreements between the UK and Singapore.
Supporting the core trade agreement are agreements cover programmes of co-operation in the areas of:
- digital customs
- digital identities
- electronic trade documents
- electronic invoicing
UK-Singapore Fintech Bridge
Under the DEA, the UK and Singapore have agreed to enhance the existing UK-Singapore FinTech Bridge. Both sides have committed to establish new structured engagement to discuss joint promotion and innovative financial services, facilitate access to trade support packages in each jurisdiction and improve uptake and joint networking.
DEA Digital Customs agreement
The UK and Singapore have agreed to establish a working group to explore issues relating to the digitisation of customs, including Single Window interoperability and supply chain digitisation.
DEA Cybersecurity agreement
The agreement on cybersecurity sets out the common interest of the UK and Singapore in a free, open, peaceful, and secure cyberspace. The 2 countries have agreed to co-operate to promote skills development, growth, innovation, and resilience.
DEA Digital Identities agreement
The UK and Singapore have agreed to support the smooth operation of digital identity systems between the 2 countries, so that businesses and individuals can participate in the global digital economy with more confidence and security. Both countries will work towards mutual recognition of digital identity approaches, which will allow digital identities to be used for cross-border transactions.
DEA Electronic Trade Documents and Electronic Invoicing agreement
The UK and Singapore have agreed to explore solutions to the barriers faced when digitising trade, encouraging businesses to use electronic invoicing and electronic trade documents. The 2 countries intend to establish a pilot project to highlight the benefits of sharing electronic Bills of Lading in the 2 countries. Bills of Lading is the main commercial document used in the shipment of goods. By removing expensive and antiquated paper record-keeping, this will help to reduce costs for businesses, drive more competitive pricing for consumers, to reduce the carbon footprint of trade.